Question

Problem 3-73B Adjusting Entries and Financial Statements Objective 4, 5 The unadjusted trial balance for Mitchell Pharmacy appears below. Mitchell Pharmacy Unadjusted Trial Balance December 31, 2018 Debit Account Credit S 3.400 64,820 583.400 11.200 230,000 S 44.000 Cash Accounts Receivable Inventory Prepaid Insurance Building Accumulated Depreciation (Building) Land Other Assets Accounts Payable Notes Payable (due 2020) Common Shares Retained Earnings, 12/31/2017 Service Revenue Wages Expense Interest Expense Total 31,200 25.990 47,810 150.000 600,000 41.200 950,420 871.420 12.000 $1.833.430 51.833.430 The following information is available at year-end for adjustments a. An analysis of insurance policies indicates that $2,180 of the prepaid insurance is coverage for 2019. b. Depreciation expense for 2018 is $10,130. c. Four months' interest at 10% is owed but unrecorded and unpaid on the notes payable.

Answer 1

Part-1)

#	Particulars	Debit	Credit
a	Insurance Expense	2,180
	Prepaid Insurance		2,180
b	Depreciation Expense - Building	10,130
	Accumulated Depreciation - Building		10,130
c	Interest Expense	5,000
	Interest Payable		5,000
d	Wages Expense	4,950
	Wages Payable		4,950
e	Income Taxes Expense	11,370
	Income Taxes Payable		11,370

　

Part-2)

Income Statement
Service revenue
Less: Operating expenses		950,420
Wages expense	876,370
Interest expense	17,000
Depreciation expense - building	10,130
Insurance expense	9,020
Income taxes expense	11,370	923,890
Net income		26,530

Statement of Retained Earnings
Beginning Retained Earnings	41,200
Add: Net Income	26,530
Less: Dividends	0
Ending Retained Earnings	41,200

Balance Sheet
Assets
Cash	3,400
Accounts receivable	64,820
Prepaid Insurance	2,180
Inventory	583,400
Land	31,200
Building	230,000
Other Assets	25,990
Accumulated Depreciation	54,130
Total Assets	886,860
Liabilities
Accounts Payable	47,810
Wages Payable	4,950
Interest Payable	5,000
Income Tax Payable	11,370
Notes Payable	150,000
Total Liabilities	219,130
Stockholders Equity
Common Stock	600,000
Retained Earnings	67,730
Total Liabilities and Stockholders Equity	886,860

　

Part-4) The adjuting entries are made to ensure that all accounts are stated properly and nothing has been omitted